Proposition 13.2

[an]

[quote=CA renter]AN,

It would also push out the long-time landlords who’ve been getting thousands of dollars in taxpayer subsidies every year. And it would eliminate the subsidies for corporations and other RE “investors” who’ve been getting an incredibly unfair deal at the expense of other taxpayers.

Enough is enough. It’s one thing to keep a person from being taxed out of their only home, but to pay thousands (sometimes hundreds of thousands, or more) per year to subsidize the profits of very wealthy people…that is totally unjustifiable.

I will show you why repealing Prop 13 protection for non-owner-occupied properties would lower housing prices and free up more inventory for people who are looking to buy a primary residence. Stay tuned…[/quote]Do you have data to prove that it’ll push the long time landlords out? flyer is one of those long time landlord and he said this won’t change his position one bit. I would agree with him. If I’m the long time landlord w/ a paid off home, I’m not going to sell my investment just because my cost went up a few thousand a year. The appreciation will more than cover that and the rental income would still be very sweet. Now, if price doesn’t appreciate but depreciate, then my tax burden would also decrease. So, unless removing prop 13 for non primary also reduces rent, it’s not going to for and long term landlords who have paid off house to sell.

FYI, 45% of Californian are subsidizing the wealthier 55%. So, why aren’t you all hell bent in protecting the poorer 45%?

[no_such_reality]

[quote=CA renter]

EconProf,

Those who thought that a 40% decrease in revenues wouldn’t affect services…38% of the population(!), not 28%. And the decrease in property tax revenues was actually much greater than that. Sorry, but that is insanely idiotic.

And I fully understand [/quote]

The only problem with this claim is the fact that property tax revenues have increase faster than population growth and inflation combined.

[quote]
Since 1979, revenue from the 1 percent rate has exceeded growth in the state’s economy. Property tax revenue also tends to be less volatile than other tax revenues in California due to the acquisition value assessment system. [/quote]

[CA renter]

[quote=The-Shoveler]To be honest I don’t see how that will help create inventory and if you lower property values it will lower property taxes as well.

The only thing I see it doing is force old apartment owners to raise rents, force places like Qceanside to remove rent control on the trailer parks. Etc… and force biz out of the state,
Anyway good luck with that.[/quote]

They cannot increase rents beyond what renters can afford without affecting their profitability in other ways: higher turnover rates, more evictions, denser living conditions, etc.

It would not directly affect rent control in any way that I can discern. Am I missing something?

And how would it force businesses out of state? Surely you don’t believe that commercial/industrial landlords are charging below-market lease rates in order to “share” the benefits of Prop 13 with their tenants.

As far as lowering property values, any loss in assessed values would be more than offset by the increased revenues that would result from the revaluation of the properties receiving the Prop 13 subsidy.

[The-Shoveler]

OK We can double you property tax but you are not allowed to pass that on to the renters who live there.

Yea that’s going to work,

I just think there will be a lot of repercussions to a tax hike of that magnitude that have not been well thought out just yet.

[CA renter]

[quote=AN][quote=CA renter]AN,

It would also push out the long-time landlords who’ve been getting thousands of dollars in taxpayer subsidies every year. And it would eliminate the subsidies for corporations and other RE “investors” who’ve been getting an incredibly unfair deal at the expense of other taxpayers.

Enough is enough. It’s one thing to keep a person from being taxed out of their only home, but to pay thousands (sometimes hundreds of thousands, or more) per year to subsidize the profits of very wealthy people…that is totally unjustifiable.

I will show you why repealing Prop 13 protection for non-owner-occupied properties would lower housing prices and free up more inventory for people who are looking to buy a primary residence. Stay tuned…[/quote]Do you have data to prove that it’ll push the long time landlords out? flyer is one of those long time landlord and he said this won’t change his position one bit. I would agree with him. If I’m the long time landlord w/ a paid off home, I’m not going to sell my investment just because my cost went up a few thousand a year. The appreciation will more than cover that and the rental income would still be very sweet. Now, if price doesn’t appreciate but depreciate, then my tax burden would also decrease. So, unless removing prop 13 for non primary also reduces rent, it’s not going to for and long term landlords who have paid off house to sell.

FYI, 45% of Californian are subsidizing the wealthier 55%. So, why aren’t you all hell bent in protecting the poorer 45%?[/quote]

As the profit margins on long-held rentals declines, other investments will become more lucrative, especially when one considers the work and risks involved in keeping the rentals (tenant problems, greater maintenance costs as the building deteriorates over time, etc.). While housing prices might increase over time (and I think it will be much more volatile than many others believe), the same economic conditions that now render a pension fund’s 7-8% projected return rate “too optimistic” will make it unlikely that we’ll see housing prices increase as dramatically as they have in the period between the 1970s and mid-2000s.

Also, please specify exactly what you’re referring to on the bolded part. Thanks!

[CA renter]

[quote=The-Shoveler]OK We can double you property tax but you are not allowed to pass that on to the renters who live there.

Yea that’s going to work,

I just think there will be a lot of repercussions to a tax hike of that magnitude that have not been well thought out just yet.[/quote]

It’s not a matter of what one is “allowed” to do. Rents are already notoriously unaffordable in the desirable areas in California (where Prop 13 has the greatest effect).

This is exactly why many landlords will re-evaluate their situation and sell their long-time rentals, whether paid off or not.

[CA renter]

[quote=no_such_reality][quote=CA renter]

EconProf,

Those who thought that a 40% decrease in revenues wouldn’t affect services…38% of the population(!), not 28%. And the decrease in property tax revenues was actually much greater than that. Sorry, but that is insanely idiotic.

And I fully understand [/quote]

The only problem with this claim is the fact that property tax revenues have increase faster than population growth and inflation combined.

[quote]
Since 1979, revenue from the 1 percent rate has exceeded growth in the state’s economy. Property tax revenue also tends to be less volatile than other tax revenues in California due to the acquisition value assessment system. [/quote][/quote]

The demographics and related spending in this state have shifted dramatically over this period. This shift has caused an increase in per-capita spending, especially in education, prison costs, and health and welfare costs.

Found this interesting site that charts the growth of various types of state and local spending. Not sure how it copies over, but compare state and local spending on pensions, healthcare, welfare, defense, etc.; you’ll see that the spending in other categories has outstripped, by far, the growth in spending on pensions.

http://www.usgovernmentspending.com/spending_chart_1970_2018CAb_15s2li111lcn_00t10t20t30t40t50f60f70f80f90fE0fF0fG0fH0f

[an]

[quote=CA renter]Also, please specify exactly what you’re referring to on the bolded part. Thanks![/quote]45% of Californian are renters and do not benefit from prop 13. They’re subsidizing the 55% of Californian home owners. Renters are usually a lot less well off than home owners. But they have to pay the tax differences through their income and sales tax. So yes, they are subsidizing the home owners’ prop 13.

[CA renter]

[quote=AN][quote=CA renter]Also, please specify exactly what you’re referring to on the bolded part. Thanks![/quote]45% of Californian are renters and do not benefit from prop 13. They’re subsidizing the 55% of Californian home owners. Renters are usually a lot less well off than home owners. But they have to pay the tax differences through their income and sales tax. So yes, they are subsidizing the home owners’ prop 13.[/quote]

Yes, they are indirectly paying the property taxes for their landlords in most cases. This is exactly the group I want to help by freeing up more for-sale inventory at better prices. Most renters want to own, but are not able to because of inventory constraints due partly to Prop 13 and also the hordes of speculators who bid-up housing prices so they can have renters pay their mortgages/taxes/insurance/profits for them.

Though this isn’t related to Prop 13, I would also disallow GSE/FHA financing for investment properties and second homes, and eliminate the mortgage interest deduction for investment properties (all MID, actually).

I would also favor changing the rules regarding “stepping-up” the cost basis of housing upon the death of an owner (for the benefit of the heir/beneficiary), and exchange that for an inflation adjustment to the cost basis for all real estate sold by anyone, not just lucky heirs. This would free up a lot of RE that people are holding onto in order to avoid the tax consequences of selling before the death of the original or long-term owner.

[an]

[quote=CA renter]Yes, they are indirectly paying the property taxes for their landlords in most cases. This is exactly the group I want to help by freeing up more for-sale inventory at better prices. Most renters want to own, but are not able to because of inventory constraints due partly to Prop 13 and also the hordes of speculators who bid-up housing prices so they can have renters pay their mortgages/taxes/insurance/profits for them.

Though this isn’t related to Prop 13, I would also disallow GSE/FHA financing for investment properties and second homes, and eliminate the mortgage interest deduction for investment properties (all MID, actually).

I would also favor changing the rules regarding “stepping-up” the cost basis of housing upon the death of an owner (for the benefit of the heir/beneficiary), and exchange that for an inflation adjustment to the cost basis for all real estate sold by anyone, not just lucky heirs. This would free up a lot of RE that people are holding onto in order to avoid the tax consequences of selling before the death of the original or long-term owner.[/quote]You still fail to see that the renters are subsidizing you, a home owner, as much as those landlord you seem to hate so much. Fact is, like it or not, you as a home owner, is taking subsidies from the poorer people of this state. If you want change, why not start w/ the person in the mirror, like Michael Jackson said so eloquently.

BTW, do you own a long term rental? If yes, would you sell if your cost of owning that property goes up a few thousands a year? IIRC, you rented from a long time landlord at a very good price. Would you think you would have gotten that rental price if their cost is higher?

Again, you’ve provided no proof that removal of prop 13 on non primary would force long time land lord to sell or it would prevent people who want to be landlord from buying.

[The-Shoveler]

There may be a small short term one or so year blip on the inventory and price as CAR suggests, but I think in the long run it would not make much difference.

Also I think the adverse affects on rents and the economy ect.. would be greater than expected.

[all]

[quote=CA renter]
Found this interesting site that charts the growth of various types of state and local spending. Not sure how it copies over, but compare state and local spending on pensions, healthcare, welfare, defense, etc.; you’ll see that the spending in other categories has outstripped, by far, the growth in spending on pensions.

Link[/quote]

The default chart is misleading because it includes 5 year projection where pensions are supposed to grow less than 10% and education 40%.

If you limit the range to 1990-2013 GDP grew 170%, pensions grew 530%, healthcare (including medicare) 600%, education 200% and welfare 210%.

In 1990 CA spent on welfare as much as it spent on pensions and healthcare combined, and on education twice what was spent on pensions and healthcare (combined). In 2013 pensions and healthcare are 30% more than education.

It looks like the chunk required to cover the cost of services provided 25 years ago (pensions, medicare) is growing much faster than what we spend on services that are being consumed now (education, welfare).

[CA renter]

[quote=AN][quote=CA renter]Yes, they are indirectly paying the property taxes for their landlords in most cases. This is exactly the group I want to help by freeing up more for-sale inventory at better prices. Most renters want to own, but are not able to because of inventory constraints due partly to Prop 13 and also the hordes of speculators who bid-up housing prices so they can have renters pay their mortgages/taxes/insurance/profits for them.

Though this isn’t related to Prop 13, I would also disallow GSE/FHA financing for investment properties and second homes, and eliminate the mortgage interest deduction for investment properties (all MID, actually).

I would also favor changing the rules regarding “stepping-up” the cost basis of housing upon the death of an owner (for the benefit of the heir/beneficiary), and exchange that for an inflation adjustment to the cost basis for all real estate sold by anyone, not just lucky heirs. This would free up a lot of RE that people are holding onto in order to avoid the tax consequences of selling before the death of the original or long-term owner.[/quote]You still fail to see that the renters are subsidizing you, a home owner, as much as those landlord you seem to hate so much. Fact is, like it or not, you as a home owner, is taking subsidies from the poorer people of this state. If you want change, why not start w/ the person in the mirror, like Michael Jackson said so eloquently.

BTW, do you own a long term rental? If yes, would you sell if your cost of owning that property goes up a few thousands a year? IIRC, you rented from a long time landlord at a very good price. Would you think you would have gotten that rental price if their cost is higher?

Again, you’ve provided no proof that removal of prop 13 on non primary would force long time land lord to sell or it would prevent people who want to be landlord from buying.[/quote]

How are they subsidizing me? I’m paying full, market-rate property taxes.

Yes, my long-time LL was an original owner, and was kind enough to “share” the benefit of their Prop 13 subsidy with us by keeping us at below-market rents (started at market rate, and was raised after the first year, per the lease agreement, and then once by us over the years). But that’s because we were excellent tenants who paid rent 6-12 months in advance, handled (and paid for) all of the small repairs/maintenance, and many of the more expensive repair/maintenance items and upgrades…and raised our own rent in order to control the increase and maintain goodwill with the LL.

And yes, an increase in property taxes would most definitely make me reconsider holding onto a property that was older (and in need of more maintenance), and worth a lot of money. This is especially true if other investments begin to look relatively more lucrative given the carrying costs — including the higher property taxes — and risks of keeping the home vs. more passive investments.

We are watching this closely because we’re probably going to inherit a couple of properties in desirable areas in the future. One of these is paid-off, and has been in the family for a couple of generations. Changes to Prop 13 for investment properties will absolutely factor into our decision-making process.

BTW, never said it would prevent current prospective landlords from buying, mostly just the long-time owners who are currently paying well below-market property taxes. Of course, in the desirable areas, there are very few “new” landlords because it’s rare for rents to cover the carrying costs of owning in these higher-cost areas, especially if the deal is financed.

[CA renter]

[quote=The-Shoveler]There may be a small short term one or so year blip on the inventory and price as CAR suggests, but I think in the long run it would not make much difference.

Also I think the adverse affects on rents and the economy ect.. would be greater than expected.[/quote]

Or not. Again, why in the world are we subsidizing the profits of RE investors?

[no_such_reality]

[quote=CA renter][quote=The-Shoveler]There may be a small short term one or so year blip on the inventory and price as CAR suggests, but I think in the long run it would not make much difference.

Also I think the adverse affects on rents and the economy ect.. would be greater than expected.[/quote]

Or not. Again, why in the world are we subsidizing the profits of RE investors?[/quote]

Because frankly, that’s just spin BS. Not taxing more isn’t subsidizing.

[Author]

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